Today, the rapid rise of technological advancements and AI-driven innovations has brought unprecedented convenience, but it also leaves us more vulnerable to cyber threats and privacy breaches. These dangers aren’t confined to just one nation but have a global impact, making robust cybersecurity solutions more critical than ever.
Given this landscape, it could be wise for investors to keep an eye on quality cybersecurity stocks such as Palo Alto Networks, Inc. (PANW), CrowdStrike Holdings, Inc. (CRWD), and Fortinet, Inc. (FTNT). These companies continuously update their software to stay ahead of the curve and provide cutting-edge security solutions.
Cybersecurity companies offer essential software that protects individuals and businesses from the increasing threat of cyber-attacks. These attacks are becoming more frequent and sophisticated, posing significant risks to private data, financial assets, and national security.
In the second quarter, there was a 30% rise in weekly attacks on corporate networks compared to the same period in 2023 and a 25% increase from the first quarter of 2024. That’s an average of 1,636 attacks per organization per week. Moreover, recent issues like the CrowdStrike glitch, which caused a significant tech outage, emphasize the critical need for reliable cybersecurity solutions.
With cybercrime potentially costing the world $9.5 trillion in 2024, the demand for robust cybersecurity is more pressing than ever. As demand for cybersecurity solutions grows, so does the business for companies in this space.
Additionally, increasing regulatory requirements and compliance mandates push organizations to invest more in cybersecurity, which bodes well for the sector’s growth. According to Statista, the global cybersecurity market is expected to reach $185.70 billion, exhibiting a CAGR of 7.9%.
With that in mind, let’s analyze the fundamentals of the above-mentioned three Software - Security stocks, beginning with #3.
Stock #3: CrowdStrike Holdings, Inc. (CRWD)
CRWD is a global cybersecurity company that provides cloud-delivered protection of endpoints, cloud workloads, identity, and data. The company’s Falcon platform is designed for cybersecurity consolidation, purpose-built to stop breaches. The platforms collect and integrate data from across the enterprise, including endpoints, cloud workloads, identities, and third-party sources.
On August 27, CRWD announced a collaboration with NVIDIA Corporation (NVDA) to secure future Generative AI with the AI-native CRWD’s Falcon® cybersecurity platform that helps developers securely leverage open-source foundational models and accelerate generative AI innovation.
With NVIDIA NIM Agent Blueprints support, CRWD enables enterprises to develop customized generative AI applications securely and efficiently, using the latest open-source foundational models available with NVIDIA NIM.
CRWD revenue for the second quarter (ended July 31, 2024) increased 31.7% year-over-year to $963.87 million. The company reported a gross profit of $726.47 million, indicating a 32.4% growth from the prior year quarter. CRWD’s non-GAAP net income came in at $260.76 million and $1.04 per share, up 44.9% and 40.5% year-over-year, respectively.
For fiscal year 2025, CRWD expects total revenue to be between $3.89 billion and $3.90 billion and non-GAAP income from operations to range from $774.70 million to $783.90 million. The company also expects non-GAAP net income to fall between $908.80 million and $918 million, or $3.61 to $3.65 per share.
Analysts expect CRWD’s revenue for the third quarter (ending October 2024) to increase 25.1% year-over-year to $983.27 million. However, the consensus EPS estimate of $0.81 for the same period indicates a 1.4% year-over-year decline. For the fiscal year ending January 2025, Street expects CRWD’s revenue and EPS to grow 27.7% and 17.9% from the prior year to $3.90 billion and $3.64, respectively.
Over the past year, the stock has surged 85.9%, closing the last trading session at $277.28.
CRWD’s stance is apparent in its POWR Ratings. The stock has an A grade for Growth and a B for Quality. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Among the 23 stocks in the Software - Security industry, it is ranked #17. Click here to see the additional CRWD ratings (Value, Momentum, Stability, and Sentiment).
Stock #2: Palo Alto Networks, Inc. (PANW)
With a market cap of $117.92 billion, PANW is a provider of cybersecurity solutions. The company’s platforms and services are designed to secure enterprise users, networks, clouds, and endpoints through cybersecurity measures backed by artificial intelligence and automation. PANW focuses on four areas: Network Security; Cloud Security; Security Operations and Threat Intelligence; and Security Consulting.
On May 15, PANW partnered with International Business Machines Corporation (IBM), a leading hybrid cloud and AI provider, to deliver AI-powered security outcomes for customers. As part of the agreement, PANW will acquire IBM’s QRadar SaaS assets, including the intellectual property rights for QRadar. This partnership positions PANW as IBM’s preferred cybersecurity partner, enhancing IBM’s internal security solutions across network, cloud, and SOC platforms.
In the same month, after their long-standing strategic alliance, PANW extended its agreement with Accenture plc (ACN). This continuation will help solve use GenAI challenges and cyberattacks for joint clients, enabling them to work toward a secure AI future through intentional design, deployment, and use of AI that creates value while improving cybersecurity outcomes.
During the fourth quarter that ended on July 31, 2024, PANW’s revenue increased 12.1% year-over-year to $2.19 billion. The company’s gross profit came in at $1.62 billion, reflecting an increase of 11.7% from the prior year’s quarter. In addition, its non-GAAP net income amounted to $522.20 million and $ $1.51 per share, reflecting an increase of 8.2% and 4.9% year-over-year, respectively.
Looking ahead, PANW anticipates first-quarter revenue for fiscal year 2025 to fall between $2.10 billion and $2.13 billion, reflecting a year-over-year growth of 12% to 13%. The company also projects non-GAAP earnings per share to range from $1.47 to $1.49, marking an annual increase of 7% to 8%.
The consensus revenue estimate of $2.12 billion for the fiscal first quarter (ending October 2024) represents a 12.9% increase year-over-year. The consensus EPS estimate of $1.48 for the same quarter indicates a 6.9% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 52.5% over the past year to close the last trading session at $362.72.
PANW’s POWR Ratings reflect this outlook. It has a B grade for Quality and is ranked #13 out of 23 stocks in the same industry. To see the other ratings of PANW for Growth, Value, Momentum, Stability, and Sentiment, click here.
Stock #1: Fortinet, Inc. (FTNT)
FTNT provides cybersecurity and convergence of networking and security solutions worldwide. The company offers secure networking solutions focusing on the convergence of networking and security, network firewall solutions, wireless LAN solutions, and secure connectivity solutions.
On August 27, FTNT announced the addition of sovereign SASE and generative AI (GenAI) capabilities to its robust unified SASE solution. Fortinet Unified SASE provides complete integration between Fortinet’s Secure SD-WAN solution and cloud-delivered security service edge (SSE) under a single console for seamless management, visibility, and security. This new update offers customers unparalleled deployment flexibility and simplicity.
On August 6, the company acquired Next DLP, a leader in insider risk and data protection. This acquisition will help FTNT to improve its position in the standalone enterprise data loss prevention (DLP) market and strengthen its leadership in integrated DLP markets within endpoint and SASE in alignment with its business strategy.
For the second quarter of 2024, which ended on June 30, FTNT’s total revenues increased 10.9% year-over-year to $1.43 billion. Its gross profit rose 16.3% from the year-ago value to $1.16 billion. Its non-GAAP operating income stood at $503.60 million, up 44.7% year-over-year, while its non-GAAP net income amounted to $439.90 million, representing an increase of 46.4% from the last year. Also, the company’s non-GAAP EPS for the quarter increased 50% year-over-year to $0.57.
According to the company’s guidance, FTNT forecasts fiscal year 2024 revenue to range from $5.80 billion to $5.90 billion, with billings between $6.40 billion and $6.60 billion. In addition, it anticipates its non-GAAP gross margin to fall between 79% and 80% and non-GAAP net income per share in the range of $2.00 and $2.04.
Street expects FTNT’s revenue for the fiscal third quarter (ending September 2024) to increase 10.8% year-over-year to $1.48 billion. Moreover, its EPS estimate of $0.52 for the same period indicates a 26.5% year-over-year growth. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
FTNT shares have surged 46% over the past nine months to close the last trading session at $76.71.
FTNT’s mixed fundamentals are reflected in its POWR Ratings. The stock has an A grade for Sentiment and Quality. It is ranked #8 out of 23 stocks in the Software - Security industry.
Beyond what is stated above, we’ve also rated FTNT for Growth, Value, Momentum, and Stability. Get all FTNT’s ratings here.
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PANW shares were trading at $362.72 per share on Monday afternoon, up $4.51 (+1.26%). Year-to-date, PANW has gained 23.01%, versus a 19.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
3 Cybersecurity Stocks to Watch as Threats Escalate Globally StockNews.com
